M/S Ajay Kumar Singh vs. The State Of Bihar

Facts

The petitioner, M/s Ajay Kumar Singh, a proprietorship firm, filed a writ petition challenging an order dated December 18, 2021, passed by the Additional Commissioner of State Tax (Appeal). This appellate order rejected the petitioner's appeal against an order dated January 17, 2021, passed by the Joint Commissioner of State Tax. The Joint Commissioner's order, in turn, was a summary of an order in Form GST DRC-07. The petitioner contended that the appellate order was bad in law due to violations of the principles of natural justice, specifically a lack of sufficient opportunity to present their case, and that the order was passed ex parte without adequate reasoning for the determined tax liability. The revenue stated it had no objection to the matter being remanded for fresh adjudication.

Held

The Court held that the impugned order dated December 18, 2021, passed by the Additional Commissioner of State Tax (Appeal), along with the prior orders dated January 17, 2021, and February 25, 2022, were liable to be quashed and set aside. The primary reasons cited were the violation of the principles of natural justice, specifically the lack of a fair opportunity of hearing for the petitioner, and the ex parte nature of the order which did not assign sufficient reasons for determining the tax liability. The Court found that all issues of fact and law ought to have been dealt with, even in ex parte proceedings. Consequently, the Court quashed the impugned orders and directed a remand to the Assessing Authority. The petitioner was directed to deposit ten percent of the total amount demanded, if not already deposited, and an additional ten percent within four weeks. The bank account of the petitioner was to be de-frozen. The Assessing Authority was directed to decide the case on merits after complying with the principles of natural justice, affording adequate opportunity to all parties, and passing a speaking order within two months. No opinion was expressed on the merits of the case, and all issues were left open.

Key Issues

1. Whether the impugned order dated December 18, 2021, passed by the Additional Commissioner of State Tax (Appeal) is liable to be quashed and set aside on the grounds of violation of principles of natural justice, specifically the lack of a fair opportunity of hearing afforded to the petitioner? 2. Whether the ex parte order passed by the appellate authority, which allegedly lacks sufficient reasoning for determining the amount due and payable by the assessee, is bad in law? Petitioner's Arguments: The petitioner argued that the order was passed in violation of the principles of natural justice, as they were not afforded sufficient time to represent their case. They also contended that the order was passed ex parte without providing adequate reasons for determining the tax liability, and that the authorities failed to adjudicate the matter based on the attending facts and circumstances. The petitioner relied on the general principles of natural justice and the requirement for speaking orders. Revenue's Arguments: The learned counsel for the Revenue stated that they had no objection if the matter was remanded to the Assessing Authority for deciding the case afresh on merits. They also agreed that no coercive steps would be taken against the petitioner during the pendency of the case.